The final rule concerning association health plans (AHPs) will increase stop-loss captive formations and increase the activity of existing group stop-loss captives, according to Kirk Watkins, practice leader of captive insurance programmes at Trion Group, a Marsh agency.
The rule, which was issued by the White House and Department of Labor on Wednesday, allows AHPs to be treated as a large group health for the purposes of the Affordable Care Act, which may allow the access to health coverage at a lower cost.
AHPs are group health plans that allow small employers access, through associations, to the regulatory and economic advantages available to large employers.
Additionally, AHPs will be allowed to be formed based on a geographic test and working owners without employees will be allowed to join.
According to estimations from the Congressional Budget Office, four million Americans, including 400,000 who otherwise would lack insurance, will join an AHP by 2023.
Watkins said he expected AHPs to impact the US captive market.
He explained: “In the US, core medical tends to be either fully insured or self-funded, due to the additional expense of a premium tax, if it were to be self-insured.”
“I believe the AHP ruling will impact the US captive market in the formation of additional stop-loss captives for new larger associations, and/or increased activity of existing group stop-loss captives as new associations join the existing group.”